Tourism Accommodation Australia acting director Carol Giuseppi said the areas most in need of more rooms were Sydney and Melbourne where “huge growth in occupancies” was driving up room rates.

“In Perth, they’re maintaining occupancies but their rate has not performed as well, and Brisbane is at a stage where it has had a lot of new supply and it is also maintaining occupancy but at the expense of rate,” Ms Giuseppi said.

Rather than a total focus on five-star product, Ms Giuseppi said a “diversity of supply” was needed in order to meet a diversity of demand.

“You still need the three-star and other sorts of accommodation,” she said.

Deloitte Access Economics partner Professor Ian Harper told the conference Australia’s tourism industry was in a sweet spot as a result of the weakening dollar, lower oil prices and growth in Asian markets.

He said research had found the dollar’s easing would “induce inbound travel but mostly only change outbound patterns” with Australians choosing cheaper destinations for shorter periods.